Where did I mentioned usurping powers from common shareholders?
You said this:
but this is to what he is referring: preferred shares would have voting rights if their existing shareholder contracts were amended
Any voting rights added to preferred shareholders automatically would usurp common shareholder voting rights. Generally speaking, the only way that preferred shareholders have voting rights is if the articles give preferreds voting rights or if the classification of stock changes, which wouldn't happen without common shareholders voting for it.
Other than that preferreds only have voting rights for issues that directly affect their stock, not the company as a whole. An example of this might be if the preferreds are voting to cut their dividend payment in an attempt to put the company into a better financial situation.
Talking about this (page 23: www.freddiemac.com/investors/pdf/FtFPrefStock-oc.pdf):
The section that you've referenced is talking about the preferreds right to vote when there is ambiguity in the preferreds' contract language in order to cure the ambiguity. This section does not give preferreds the right to additional voting rights. Preferreds can vote on issues that directly affect their stock, but not on issues of the company.
If you take issue with FHFA/UST converting preferred shares to common share and ostensibly usurping powers from common shareholders, HERA allows for capital restoration plans to be submitted by the GSEs and approved by FHFA (as you are well aware).
It's not that simple. Preferred stock can only be converted to common in two situations. 1.) If the preferred stock classification is convertible. 2.) If the common shareholders vote to let it happen.
I know that the common shareholders wouldn't vote this way, likely, but I'm unaware whether preferred stock is classified as convertible. If it is, please edify me! Is there a conversion clause in the preferred stock?
If not, then the company can't just decide to convert on its own...that would violate several corporate laws.
Now, if you are talking about the GSE doing this in violation of the law, citing HERA as a reason they are able to,...then they will likely face another decade of lawsuits. The only difference is that a Takings lawsuit would now be valid, and the price of the Takings would be at current price, not when the NWS occurred. And just to remind you, ...Takings cases are not prohibited by HERA.
